A noticeable trend has been to add more instruments that provide direct financial boosts. The Polish government has faced criticisms for the delays in providing solutions and for the scope of the aid, while the UK government has been lauded in most Polish news sources for its timely and direct response in providing solutions that support businesses’ cashflow. It is interesting to compare the two schemes to find out whether the difference really is that pronounced.
A basic comparison can be made based in four separate areas – lump-sum aid, tax and social security relief and exemptions, income-support schemes for employees and the self-employed, and lines of credit.
Lump sum aid
The Polish relief scheme provides for lump-sum aid to self-employed entrepreneurs and persons working on the basis of civil law contracts, subject to a drop in turnover, at the level of 2,080 zlotys (tax exempt). This payment may be repeated up to two times if the financial situation of the beneficiary is not improved.
In the UK, small companies which use real estate for the purposes of their operations and pay low or no business rates on the basis of Small Business Rate Relief, rural rate-relief or tapered relief schemes, will receive a one-time lump sum non-refundable payment of £10,000. Additionally, companies operating in the retail, hospitality and leisure sectors can expect a subsidy of £25,000 on the basis of the Retail and Hospitality Grant Scheme, as well as automatic business rate relief.
British aid is paid out automatically by the authorities. In contrast, to receive the 2,080 zlotys grant, Polish entrepreneurs must file applications, either through online systems or through traditional means, and await the payment of their subsidies (though these do seem to rather rapid).
Tax and social security relief and exemptions
As to tax and social security relief, both governments provide deferral of income tax payment dates.
In the UK, unlike in Poland, the VAT payment dates have also been deferred. On the other hand, the Polish government has made it possible for the self-employed as well as micro entrepreneurs, to be exempt from social security contributions for a period of three months. This applies to entrepreneurs who pay social security contributions for up to 250 persons, but only up to 50% of the amount of the contributions. This too has to be applied for, which is tied with a certain period of uncertainty as to the success of the application.
Income support schemes for employees and the self-employed
Regarding income support schemes for employees and the self-employed, Poland has introduced two ways of supplementing employee income. One is tied to the introduction of furlough or reduced working time, which allow for the lowering of salaries, while the other is available for microentrepreneurs and SMEs depending on the scale of drop in their revenue. The latter can also be applied for in the case of self-employed entrepreneurs. Both are capped in relation to the minimal or mean wage, which means that the aid will not exceed around 2,400 zlotys in the most generous case (subsidies for the self-employed and income support for employees with reduced working time). In the UK, income support may reach up to 80% of the pre-Covid-19 remuneration, with a maximum limit of £2,500 (both on the basis of the Self-employment Income Support Scheme for the self-employed and the partners of a partnership, and on the basis of the Job Retention Scheme). The Job Retention Scheme, the purpose of which is to supplement the incomes of the employees who otherwise would have been made redundant and shall be furloughed while receiving government support.
Lines of credit
Finally, both countries have introduced complex systems of loan schemes and loan guarantees. Some of the Polish loan mechanisms are partially non-refundable if certain conditions are met, which means that they fall somewhere between loans and subsidies in character.
The British government introduced the Coronavirus Business Interruption Loan scheme, which facilitates access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years, straight away – for SMEs (large companies may benefit from an analogous scheme, subject to different conditions). These come with a Business Interruption Payment, covering the first 12 months of interest payments and any fees, which removes the upfront costs of taking out a loan, and lowering the initial repayments. Such loans are issued guarantees by the government. The scheme is carried out through commercial lenders.
Initially the only loan option in Poland was a microloan of 5,000 złotys, available only to microentrepreneurs. The debt is written off in full if the microentrepreneur continues to exercise economic activity for a set period of time. Additional mechanisms, such as in the scope of granting loan guarantees, are also in place.
As of the beginning of May, a scheme similar to the British one is being set up now in Poland, and will be organised by PFR, (the Polish development fund, a state-owned financial group). It is set to offer subsidies, partially non-refundable if certain conditions (mostly maintaining the level of employment) are met, for up to 75% of their value. As with the Coronavirus Business Interruption Loan scheme, the aid is to be paid out through commercial banks and is to incur a minimum of bureaucratic formality. The criteria for receiving aid have been proven stricter than first information from PFR would have it (for example, the status of the employer is determined as of 31 December 2019, not as of the date of filing for the aid, which in turn affects the rates at which the subventions are calculated).
All in all, the aid offered by the Polish government seems to have caught up slightly with the more beneficial forms of support which are the cornerstone of the British programme. Further programmes are to be developed at a regional level, using EU funds. In comparison to the British solutions, its systemic and sectoral solutions seem to be lacking – though that too may be subject to further change, as the railway sector is to be boosted by new regulations, which are now being proceeded by the parliament.
It must be remembered that no new solutions have been adapted in Poland at the level of the individual – particularly those that might find themselves currently out of work, as there have been no changes in unemployment benefits. In Great Britain the Universal Credit system seems to be much better suited for the current situation. As a result, we believe that the assessment of actions taken by the Polish government may be possible only on the basis of observations of the economy in the second half of 2020.